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The turkey, home-made cranberry sauce (from locally picked berries), freshly baked apple pies, and latkes are gone along with all of the visiting holiday relations. It is time to get back to work and head for Hong Kong and Shenzhen for the HKPCA/IPC APEX December 4-6 event! It is time to run down the stories of the competitive margin squeeze on HDI boards; investigate the shortage of engineers in Hong Kong forcing PCB companies to recruit in the U.S., China, Taiwan, Europe, and Japan; learn more about Intel's foray into the new Chromebooks produced by Asustek and Toshiba with expected machines to be released early in 2014 priced between $199 and $329; verify the continued delays of SMT capital equipment orders well into 2014; and get a first-hand impression of the general outlook by the various Chinese electronic-related industries and their current short-term/long term views.
It is time!
If Major Japanese companies have made English the official language of global meetings, shouldn't the United States make English its official language? On November 22 Honda Motor Co. made English the official language of global meetings. Honda follows the language conversions of Fast Retailing Co., (the biggest apparel seller in Asia) and Rakuten Inc. (Japan's biggest internet mall). Honda's CEO shocked everyone when he said, "...if you don't understand it, get an interpreter." I personally remember that this was the rule at the international sales meetings of Oxy Metal Finishing (subsidiary of Occidental Petroleum) held in Geneva Switzerland about 40 years ago when I was Vice President of Business Development. Today, all of the managers' sales meetings held by Wong's Kong King Distribution in Hong Kong and China are conducted in English. When my grandparents arrived in America they had to learn English to get a job and survive. Why can't all Americans today unite under one language?What do YOU think? Send us YOUR comments and opinions.
Productronica was the busiest in nearly a decade. Many companies reported sales/orders off the booth. Europe is recovering. Mexico is going strong. The 2nd and 3rd days of the four day exhibit had the most traffic. 38,000 visitors from 83 countries came to view the 1220 companies' wares from 39 countries. A lot of new SMT machines from smaller suppliers were on exhibit. Vi Technology’s new “warp” true 3D color spi system drew rave reviews from those who had been waiting several years for its introduction.
The Juki absorption of Sony’s SMT line was a frequent topic of conversation as folks wondered how compatible the two companies’ lines would be for integration.
A surprise “hit” of the show was the Italy’s AEB Technologies new concept in electronics production. Robotic modules in an overhead gantry (or in desktop model formats) demonstrated odd part placement, incredible soldering in tight places with inert gas, material dispensing and other labor saving steps with great precision. An 8 robot line was said to be priced at only 120,000 Euros. Siemens was reported to be one of the company’s first major customers.
AEB did not yet have representation in the U.S. or Asia.
Endicott Interconnect Technologies (EIT) has emerged from bankruptcy as i3 Electronics. But, we believe that it will take more than a name change and downsizing to rejuvenate this one-time "high flyer". September's losses were over $1 million. I, and one of my colleagues, have each been responsible for conducting a turnaround in years gone by. The first thing we had to do was to stop the red ink from flowing. As part of this we both followed the advice of other experienced executives and told our staffs that "there are no sacred cows!" We wish i3's new president good luck in accomplishing this daunting task with one of America's few hi-tech independent packaging houses.
China will most likely continue on its track to flex its muscles and globalize its currency following its approval of two domestic fund managers to offer, for the first time, U.S. investors indirect access to shares traded in Shanghai and Shenzhen.
The mood at the TPCA in Taipei was relatively somber with light activity on the show floor even as the technical conference had a strong showing. It was a bit of a shock (but not totally unexpected due to the recent sale of the business) to see the total lack of presentation in the large Hitachi Via Mechanics booth. Some said that the Xmas "slow-down" could be a month early (November) this year. Yet, board suppliers to "Western brokers" were pushing for higher prices
A major increase in the use of automation (load and unload systems) was noted on equipment previously shown as manually fed systems throughout the show indicated a trend to reduce labor costs and increase manufacturing consistency and yields.
Laminate producers bemoaned the lack of business as they discussed the introduction of new "low loss" materials. Many companies (power supply makers, board builders, specialty chemical providers, bare board fabrication and SMTA equipment reps and providers) stated that this year's business would wind up down 20% to 30% (or more) than 2012 - in itself a difficult year.
AVI and direct imaging appeared to attract the most attention during the show. Japan's Inspec and Hioki demonstrated their newest systems to invited prospects in a private demonstration rooms in the TKK booth. Orbotech gathered the largest crowds when its minion of robots performed synchronized dances to the delighted crowds of young engineers and touring students.
Dr. H. Nakahara (below) of N. T. Information Ltd. presented “World Economy and its Influence on the Taiwan PCB Industry” to Taiwan's interconnect Industry’s leaders at the TPCA's Directors' breakfast meeting on October 24.
PWB companies that ventured into PV solar manufacturing a few years ago stated that they are cutting their losses in this field and focusing on future interconnect related growth. They stated that only the "giants" in this industry had a chance to profit now or in the future. We queried a number of industry leaders on what their opinions of production 3 years out for their companies would be like.
The major Taiwan-based substrate makers have developed coreless IC substrates for use in thin profiled mobile devices. Nanya introduced its 5+1B FC BGA at the show.
Unimicron's chairman stated that his firm was already working on a 10um process for organic substrates and had also developed a coreless technology for making very thin IC substrates. NanYa's VP of substrate manufacturing sees the future for substrates for his operation in SIPs and advanced HDI areas. Unitech's Vice President looks to focusing on rigid-flex and advanced HDI. He stated that his company will expand capacity for 50um circuitry in 2014. Unitech's rigid-flex board revenues could increase to 20% of the company's revenues in 2014 from 15% this year. All stated the importance of hand-held and automotive applications.
MacDermid, promoting its automated system for plating and via-fill, sees good growth this year with Taiwan and China-based companies.
The quality of China designed and reverse engineered versions of process equipment continued to improve. This will further threaten the survival of Western (and Japanese) equipment makers.
A major American-based global flex and rigi-flex fabricator attending TPCA-IMPACT bemoaned how difficult it is to gather complete and accurate business and process metrics on major Korean, Taiwanese, and Chinese competitors for his benchmarking efforts. The IMPACT conference offered some very interesting papers though more nuanced given the greater R&D orientation of the talks. Advanced packaging, and especially 2.5D and 3D, are of high interest in Taiwan as well as in the U.S.
The joint SMTAI-IPC event in Ft. Worth went well. It was busier than expected with attendance up 40% to 1,300+, a gain of over from 2012. Much of the increase can be attributed to the colocation of the event with the IPC's fall standards development committee meetings. The Evolving Technologies Summit was well received with excellent reviews. CGI reported great enthusiasm for the roll-out of its new optical inspection device. There were some minor issues on meeting rooms due to the "last minute arrangements" and the late finalization of the agreement to cooperate. However, there is great optimism that next year's joing activity will improve as both groups will work together in planning stages.
It's good news if this repeats. China’s growth accelerated in the third quarter, putting to rest for now fears that the world's No. 2 economy was headed for a sharp slowdown that would rattle world markets according to the WSJ. China’s GNP grew 7.8% from a year earlier, according to data from the National Bureau of Statistics, up from growth of 7.7% in the first quarter and 7.5% in the second.
Watch for a resurgence of PV Solar and electric powered vehicle activity in China as the government is offering extra funding of more than $800 million to reduce pollution by year-end. Hebei has already removed 411 small co-fired boilers and kilns. Beijing will reduce air particle density by 25+% in the next five years by reducing the city's annual coal consumption to 10 million tons. It plans to close four remaining gas fired plants in the city before 2015.
We believe that this one will be different! We have watched historic pioneers, innovators, and industry stalwarts vanish, decline or merge into obsolescence over the past decade as the profile of the electronics industry and its supply chain went through radical changes and shifts. We have stated that it will take deep pockets, close ties to OEMs, IC companies, and major EMS firms to grow in the future. Small companies with great ideas and products do not normally have the assets to bring their wares to commercial success on their own. They often are not able to directly reach the decision makers in their particular buying publics or influence the decision makers of their prospects' customers. Mergers often do not have a common expectation prior to their joining together. Where are Shipley, Dynachem, Lea Ronel, Sel-Rex, Mica, Fortin, et al today?
We believe that this one will be different! It brings together a specialty chemical company that has continued its focus and profitable operations in difficult times through recession and industry consolidations as well as major technical and geographic market shifts with the former CEO of a corporation that has grown nearly 40 times during the past decade to $8 billion.
We believe that this one will be different! The acquisition of MacDermid by Platform Acquisition Holdings Limited (to be renamed Platform Specialty Products Corporation [PSP]) does several things. It increases MacDermid's resources. It brings to MacDermid the added financial strength of the investors of PSP. It brings to PSP a seasoned successful specialty chemical executive along with his management team in the person of Dan Leever, MacDermid's chairman, who will become PSP's CEO. The move further broadens Platform's base and positions it to leverage itself into a major global specialty chemical corporation.
No relief in sight
Suppliers of equipment and processing materials in Greater China continue to report low business levels. The expected annual broad year-end build-up for the Xmas season did not materialize. Equipment and other "unnecessary" purchases now seem to be on hold until after the Chinese New Year, even though there seems to be some recent improvement in China's economy and export levels.
Taiwan's decline in notebook production has put a damper on that industry's participants. As a result, PCB fabricator plant utilization has fallen to less than 70%. This has put a major damper on sales of PCB fabrication and assembly equipment in the region. It will be interesting to see what Taiwan's circuit makers , with a large footprint in Mainland China, have to say at the TPCA in Taipei later this month.
PCB West 2013 which was held in California at the same time as the TMRC conducted in the Midwest was by all accounts a smashing success. More than 1,700 attended the three-day conference (55 presentations) and one-day exhibit (of 84 booths). Technical sessions were packed with as many as 90 per session while traffic on the show floor was strong and steady.
Attendance at the resurrected TMRC was reported to be disappointing with fewer than 50 registered attendees. Presentations were said to be "mostly good." This type of event should look more to the future while considering timing, competitive venues, technology, industry shifts, product life cycles, specific related financial/economic conditions, global situations and competition, shifting trends, and the funds and alliances needed to move ahead. Speakers should be more than just "mostly good" to attract senior executives. Networking in itself at the top level is not necessarily an attraction. Major challenges should be addressed and solutions offered for consideration.
The IPC Component Conference did not disappoint! It was a success by any standard measurement except possibly attendance.
It's top to bottom coverage of packages and their future directions and challenges with a first-rate array of speakers gave great insight to current activities, gaps, new materials and approaches, as well as the future possibilities of interactive design activities that link chip to board early on for changes, 2.5D and 3D, HDI, substrate and foil options, needs, and the resurgence of thinner packages and boards - including "burieds" - after a brief hiatus. The IPC's Susan Filz did yeoman's work in keeping things running smoothly. Amkor hosted a reception that provided the opportunity to continue information exchanges as well as to develop new networking opportunities.
Some of the Key "take-aways" for me included:
Taiwan's ITRI is supporting R&D on filled vias 10-30um as part of 2.5D and 3D "flexible" glass (100-700um thick)interposer tests. The glass is an advanced aluminosilicate composition formed by an advanced optical sheet fusion process (by Corning). It is probably 3 to 4 years away from production acceptance;
There is renewed activity for thinner (without glass reinforcement) packages and ultrathin substrates (,100um for 2 layer, 130-150um for 3 layer, and 170um for 4layer with lower CTEs. Amkor now accepts coreless packages. Coreless is aiding the migration to systems level packages 250um (and thinner); High volume interposers for mobile applications are being cost driven to $0.01/square mm;
Work on the embedding of "actives" is restarting. Growth is forecasted at 30% AGR for 2015-2020. Costs for embedded are said to be 3X cost of surface mounting - but then there is the volume issue; The MCM interposer market has a long life; Lithography now accounts for 50% of wafer costs;
There is a resurgence in the use of dry film solder mask. Have you heard of the "slap laminating process"?
2.5D could defer the advent of 3D by a year or two to 2016 or 2017. The jury is still out on potential successful architectures. There is a need for market research firms to quantify the 2.5D-3D situation and realizable potentials. Si interposers may be the interim solution (vs. glass and organic) before 3D IC @ TSV is possible; There is still no business model for either package. Will ESD be needed? Standards are needed for both. Who should develop them? Deep pockets are needed. The volume applications will be mobile devices and automotive. Modern automobiles have over 100 sensors;
Excluding materials, 35% of board manufacturing costs are in drilling; Now that EIT is "Kaput" - according to Dr. Nakahara - virtually all substrates are now Asian made; reality of future (near term) designs are challenging standards for boards - e.g., 0.4mm patterning does not leave room for tracks and Class II violates the 3mil space rule - new standards are needed; Lots of work is being done on substrates and bonding land build-up layers to provide greater stability, strength, improved electrical properties; properly designed microvias have better life (are more robust) than conventional PTH boards; Some boards with 10 layers and a 4+2+4 construction can cycle through a factory 4 times; 25:1 aspect ratios are also a driver for thinner boards and more demanding drilling requirements and times are also drivers for thinner parts; 98% yields are needed for these boards.
Everything seems to be designed in silos - this is now just beginning to be changed. There are new activities to interface between SoC/Packages/PCBs so that simultaneous changes can with bidirectional design rules with ICs;
Any layer technology allows 8 and 10 layers for mobile phone [production. 10 layer boards with an OA thickness of 720um are now possible, i5 has 50um lines and spaces. Current roadmaps are pushing to 40um L/S. The use of on board passives is increasing; 4th generation OSPs are offering better protection with thinner coatings; A new version of an "older technology" using colloidal PD and platable ink was presented. Advances in the use of sinterable metallic inks was discussed;
Intel says that flip chips are here to stay (really?). In 1981 there were 2 million transistors on a die. In 2011 there were 2 billion transistors on a die. See Harvey Miller's comments on our Discussion page.
As I prepare to go to the IPC Conference on Component Technology: Closing the Gap in the Chip to PCB Process in Chandler, Arizona next week I wonder how much of the information presented will be useful to the material and specialty chemical suppliers for planning next year's budgets and projects. As I review the papers submitted and available - less than a week prior to the event - I wonder if the missing documents and titles will actually show up and if so, if they will be made available during the meeting. I wonder even further about how relevant information will be forwarded to all those who have a stake in the packaging game - present and future. I wonder who will develop standards for 2.5D and 3D - and when this will be done. I wonder if both packaging systems will succeed, if they will interact and if so, how? I wonder if the IPC can lead the way and help consolidate the efforts and activities of all the apparently divergent as well as overlapping (new and old) groups and stakeholders. I wonder how if there is a practical way to end "stove-piping" activities. I wonder if a way can be found to incentivise the major players with strong cash positions to partner (invest in?) new alliances and partnerships that will help defray the costs of developing the products to fill the gaps in next generation packaging; More Asian facilities can produce boards with 75um (3 mil) lines and spaces and 150 um (6 mil) holes.
A forerunner of good things to come? This could be - if the U.S. government provides incentives to manufacture in the U.S.
Motorola's dramatic introduction of the US-made Moto X smart phone assembled in the U.S. at a build cost competitive to that of Apple's IPhone 5 and Samsung's Galaxy S4 shows that the world is once again changing. The 16 GByte phone is based on Qualcomm's design and semiconductors. It uses SoC packaging and is similar to OTC and Samsung devices.
If price were the sole determinant the Yugo would have been a huge success.
In what should one invest? The development for next generation packaging materials, equipment and processes will be expensive! Should one go for 2.5D as some advocate, or 3D packaging as others propose? Although 2.5D appears to be a viable "short" term solution, recovery of R&D costs may be difficult if a 3D solution succeeds early on, especially with the push for SIP (system-in-package) technology. Applied Materials is working on 3D packaging with the Institute of Microelectronics in Singapore's Science Park II.
The Assembly & Testing Committee (A/T Committee) of SEMI China has set a new goal — to figure out the technology roadmap. Its intent is to help "local" IC companies clearly identify the challenges for 3D-IC so that the fmilestone for each challenge can be forecasted.
The IPC's forthcoming conference on Component Technology is expected to provide further insights to the challenges facing today's component and substrate members of the industry's supply chain and point out the specific technology gaps currently facing the industry.
China's domestic PCB fabricators are beginning to flex their muscles. They have greatly improved their manufacturing technologies during the past few years. Domestic smart phones, such as OPPO are gaining market shares from Samsung, OTC and other foreign brands (Apple is NOT the leader in China's markets). Chinese LCD TVs and PCs are establishing broader market bases and beginning to gain acceptance in global marketplaces. The Chinese government "supports" home-grown products and encourages its native brands to use domestic manufacturers in their supply chains.
Now, based upon the growth of fine featured circuitry, new packaging technologies, shrinking margins, and the continued increases in labor costs (20% again this year in SE China), China's industry is now focusing on automation (robotics) and improved quality. This was evident in the exhibited products at NEPCON China in Shenzhen this month.
Japan's dramatic drop in board production the first half of 2013 coupled with the sale of the once mighty Hitachi Via Systems hole forming equipment business (mechanical drill and laser drills) truly signals the approaching end of the era when that country led the world in PCB fabrication and assembly technology.
It is time for new strategies and business models
There is no specific relief in sight yet. EMS bookings in China are down. The usual August business build-up and demand for boards and assemblies for the "Xmas season" has not yet occurred. Equipment orders are still slow in being released. Cisco's announcement of a reduction of its workforce of 5% is not encouraging. Juniper Networks, Palo Alto Networks and Huawei continue to unfavorably impact Cisco's results.
The electronics interconnect industry is apparently in the mode of being redefined. Business models are changing again in the midst of economic uncertainty. Orbotech's upgrading of some of its 4 watt LDI installations in Asia, refurbishing them, and selling them at deeply discounted prices in the U.S. may be one such example of a business model change.
Charlie Barnhart's Beyond Outsourcing Blog #4 - Outsourcing Alternatives provides some stimulating thought and possible hope for mid-size OEMs as some of the major EMS firms are no now fully utilized. He concludes the blog with some valid points with which I strongly agree. These bear repeating: "That manufacturing a high quality product on a consistent basis - especially when others are not - is a good idea even if prevailing opinion brands it an extravagance." and "The financial community must not dictate the business requirements of an industry. Companies must start planning for the long term, not just the next quarter."
How many times have we heard the latter statement?
Interest in adding to our "Discussion" page continues with stimulating comments by Harvey Miller and Mike Buetow.
During the next few weeks we will post on our new Discussions page excerpts, comments, opinions, and paraphrases on the topics below and the state of our industry from such industry notables as Dan Feinberg, Dr. Lee Parker, Joe Fjelstad, Bernie Kessler, David Wolff, Michael Weinhold, Dr. Alan Rae, Peter Bigelow, Harvey Miller, Lionel Fullwood, Mike Buetow, and other industry participants.
My rant below stirred up quite a bit of activity so I will continue. The PWB industry was built by innovators, entrepreneurs, and independent risk takers. As items were standardized they were commoditized. As volumes grew production became the domain of the large operations with little or no interest in R&D or entrepreneurship. Price became king. This resulted in basically two separate nearly sequential events: The transfer of volume consumer electronics to Japan which focused on automation and quality, followed by off-shoring to the low cost manufacturing location of greater China (including Taiwan). This was followed, as the U.S. and Europe's bare board bases became hollowed out, by shifts from Japan and Taiwan to producer-sites in Mainland China. Now, China is not only building a domestic market, with its gained facilities and knowledge, it is also competing on the world stage with its own brands, e.g., Hua Wei and Lenovo, as it buys properties and businesses in the "Western World".
Meanwhile, in the bare board business, only the swift and the small survive in America. The business models they use along with their problem solving creativity for new board designs would not survive in high volume applications. Strategically this group no longer seems to count when their customers (these are not partners no matter what the hype may be) continue to reduce their numbers buy squeezing margins and demanding extended payment terms. They seem to be confusing valued suppliers with their banks.
This leads to the topic of re-shoring. Why bother when customers do not value your services, the government overburdens operations with regulations and taxes, and few companies have the resources or willingness to invest in the future? Unless these situations are righted the electronics industry in America is sure to perish.
How do you do it today? What really counts in this age of digitization, dehumanization and automation? Is the lowest "price" always the lowest cost? How do you define "customer relations" in the digital age? Does management know how to measure value in this world where variables are occasionally beyond actual or affordable control? What happens when custom products are priced as commodities? Does your supplier (he really is NOT your partner) promise you anything then apologizes later? Does your the new buyer/manager at one of your major customers suddenly ask for all of your quality-shipping records back to day 1 because years after nearly perfect performance you were short a few boards on a 1,000 piece delivery while he places the next release with a competitor of yours? (He is really NOT your "partner" either!) Is there any loyalty left in the digital age? What do the new screen watchers, bloggers, and social media members value? Are we all scrambling for pennies while the dollars end up in the coffers of a few very large corporations? One consultant tackled the sales part of this equation in a recent column.
What do you think? Send us your comments!
The final nail?
Does EIT's chapter 11 filing coupled with the announcement of negotiations to buy its remains signal the end of whatever American high-tech volume PWB leadership remains in America? It joins the long gone leading domestic innovative volume board makers: Methode, Burroughs, IBM, Collins Radio, UNIVAC, DEC, Autonetics, Hewlett-Packard, Photocircuits, AT&T/Western Electric, Bureau of Engraving, Stromberg Carlson, and others.
One of a kind
Masamitsu “Matt” Aoki has completed updates of his charts Build-up Type of Printed wiring Boards and Their Application in Japan (Version 13.1) and Thin Types of Printed Circuit Boards and Their Application in Japan (Version 23.1). These amazing unique tables provide an unusual insight as to where and how various printed circuit technologies are used in the “real world”. The newest issues were copyrighted in June 2013.
Please write to us or to Mr. Aoki directly if you would like to have copies emailed to you.
Semiconductor forecasts for the next 1-2 years are strong (20+%), but how will they affect the PWB industries? Will advanced fabricators, such as AT&S and Unimicron, start making 2.5D packaging substrates? Will the other packaging companies follow Amkor's lead? Will CAMEST help keep all informed of the seemingly endless choices and gaps that face the assembly and packaging service providers? How will new materials fit in? The biggest increases will be in China, Europe, and Korea. Korea declined more than 20% in capital spending for chip production equipment in 2012. Taiwan will remain the biggest buyer of new equipment at with a spend of more than $10 billion forecasted according to SEMI. This bodes well for those still building substrates and PWBs in 2014.
Innovation is where?
The search for replacements for ITO are reported to be widespread. We have now learned that Sharp, the first to commercialize IGZO, a fast responding low power alternate, will provide the technology to China Electronics Corporation (CEC), a state owned business, to mass produce displays with this technology in 2015.
The show must go on! But what show? There were more than 60 small booths representing universities and local institutes at the JPCA filling the spots formerly inhabited by PCB makers and their suppliers. Few Westerners (other than exhibitors or employees of Japanese or Asian owned companies) could be seen. There were displays of 2.5D and 3D packages but no affordable solutions. Embedded components were still on many minds, especially with the knowledge that they are used in camera sensors. Embedded actives still await the implementation of "known good die" at the wafer level. Now let's see, on boards of about an 1/8 of a square inch each, 100 million cameras would need about 12.5 million square feet of PCBs, less than the output of one of the larger HDI fabricator plants in China. One has to wonder if these will be replaced by organic CMOS sensors some day soon.
Printed electronic circuits are still seeking their niche markets. Many of the vaunted bare board equipment displayed were slight retreads of systems already shown elsewhere in the world. Ushio appeared to be one of the exceptions with its new direct imaging system with a 5um line and space capability. A display of the "intestines" of smart phones showed that they have migrated away from their predecessors. Flexible circuits seemed to be limited to use for connecting the touch screen. Main boards sported 10 layers of FR-4 and ALIVH type of construction. AT&S' booth promoted 2.5D packaging on the heels of its stated intent of producing IC substrates while Unimicron budgeted $325 million to develop thinner high density chip scale substrates.
In general, shop owners and equipment suppliers to the bare board industry that attended the JPCA event were rather morose in their outlooks. Increased "rationalization" is expected. The merger of Sony's and Juki's SMT equipment businesses sparked further speculation. Conflict with China over the small uninhabited Senkaku-Diaoyu Islands have put a damper on Japan's current trade and agreements as well as future possibilities for future growth in electronic (and other) manufacturing. Optimists that hoped for a 2nd half pick-up had their spirits dampened a bit with news of continued slowing growth in China. - I still have a problem understanding why economists are complaining about growth of GNP that is "only" about 7%.
The relative lack of innovation on display, the decline of the PCB industry in Japan and future opportunities were the dinner topics for the "old timers" June 6. Shifting from mass production to short run niche market demands will not fill the gap left by behemoth automated operations designed for very large runs. Moving into printed electronics must await standards development and growth in market demand.
But, there was a glimmer of hope when the rapid rise of display panels was brought up. Demand is multiplying for hand-helds, large tabletop systems, automotive systems, and other displays. Shipments of touch screen* panels are forecasted to increase to 2.8 billion units in 2016. Some of the technology is related or similar (but different) to board substrate fabrication: coating of ITO onto glass, processing of glass, depositing of films and conductors, imaging, applying protective coatings,
The topic of graphene was introduced by dessert, but time ran out. It should be interesting to hear what one of the IPC's September keynoters has to say about this one at the Tmrc gathering of senior managers and executives.
There surely must be some opportunities for those with vision and creative talents.
*The 11th China (Shenzhen) International Touch Screen Exhibition 2013 will be held November 25-27.
Although all of the presentations and keynote speakers at the Electronic System Technologies Conference held in Las Vegas May 20-23 were of value, interesting and well presented to those who attended the various tracks, several caught my attention as being especially worthy of further pursuit. One was the apparent strength of 2.5D solution amongst a variety of packaging challenges and options. The other, which affects all of the members and segments of the microelectronic supply chain in pursuit of the future and funding, was the stated need for a new business model. R&D and manufacturing funds, profit margins, consolidations, time to market have all served to squeeze everybody's budgets, cash flows and bottom lines, save one group - the OEMs. The advice given was to "follow the money". Bringing the OEMs back deper into the supply chain equation may be the only practical solution to selecting and funding future commercially viable solutions - both large and small.
How does one stay linked to the technology changes that blur the clear definitions of various segments of the electronic packaging industries? Please note that I said industries, not industry. Will they all wind up the purview of a handful of giant corporations and organizations? How will one find new promising technologies that apply? How will these be funded to get beyond the alpha demonstration or beta stages? Who will adopt and sponsor those that are not yet finished items to which standards can be developed or applied, e.g., process or breakthrough proprietary materials, or production or test/inspection equipment. (I am personally aware of several that have demonstrated proof or principle, moved beyond the alpha stage, or are just preparing for scaled up production. These are in jeopardy of languishing into oblivion as "no-one" wants to invest in "Western" inventions in the PCB or PCBA, industry during the current economic malaise.) There is still a prevailing attitude of "I tried that," for advancements in prior technologies that may now make them commercially viable. Perhaps some answers may be found at the forthcoming ESTC gathering, the CAMEST formation meeting, or the proposed resurrection and reconstitution of the TMRC.
Are you following Charlie Barnhart's columns on EMS, ODM and OEM trends and business? His recent publication on 10 global trends confronting OEM operations is fascinating and chock full of ideas and stimulae for those working on strategies to move forward in the rapidly changing marketplace. Of note is his perspective, with which we agree, on the rate of increasing labor costs in China, slowing growth of outsourcing to EMS companies, unprecedented risk in supply chain sourcing, and shorter demand cycles. He states that OEMs have fewer resources. This applied to more than just OEMs. It includes suppliers of manufacturing equipment. This also provides ne opportunities for creative planning and actions.
Unimicron Technology still remains cautious about its printed circuit business outlook for the second quarter of 2013 after its revenues dropped 14% on quarter and 11% on year to NT$14.62 according to the DigiTimes.
Reza Meshgin, Chief Executive Officer of MFLEX, commented after announcing a 16% decline for the 2nd quarter ending March 31, "Due to continued soft market conditions, we plan to continue to focus on reducing inventory levels during the third quarter. Therefore, we plan to again minimize production which we expect to continue to pressure our gross margin during the quarter. We believe these conditions are temporary and continue to expect a rebound in revenue and profitability in the fourth quarter and further into fiscal 2014, when we anticipate an increase in demand from both long-standing and newer customers. During the second quarter, newer customers comprised approximately 8 percent of sales and we expect this contribution to double in the third quarter. We are optimistic that this new customer momentum will continue, and that a broader customer and product base will alleviate the current challenges associated with seasonality and product cycles as we enter into fiscal 2014." The Company expects net sales to be between $155 and $185 million and gross margin to be approximately breakeven based on production build plans, projected sales volume and anticipated product mix.
Another national treasure lost?
The April 26 news in The Gazette of Cedar Rapids announcing the impending closure of Rockwell Collins' 49 year old printed circuit operations should be spotlighted nationally for several reasons. It cites declining profits and business as the reason for the decision. It follows by just 6 months the layoff by Rockwell Collins of 300 workers. It signals the continued decline of manufacturing in America along with the accompanying know-how and innovation formerly ascribed to Collins' printed circuit business. It says that outsourcing PCB production is fairly common in the electronics industry. This is true. But then, the article states that Apple, the "most valuable company in the United States outsources the manufacture of all its components, including printed circuits." What it does not tell us is that these components are also primarily purchased and assembled into iPhones and iPads in China, mostly by Foxonn (Hon Hai). Tens of thousands of Chinese workers are employed to do this profitably for Apple. Is the Rockwell Collins spokesperson who was quoted inferring that Collins' boards are to also be made in China? Is there an ITAR isuue involved in this case? In any event, the announced closure plan should remind us that our once strong manufacturing base that produced nearly 60% of the jobs in the U.S. when the Collins PWB works was founded has now shrunk to about 20%, or less. Manufacturing in America is now reported to be only about 20% of our GDP. So I listen to all those that say we must bring jobs back to America and wonder, "How? Over what period of time? In what industries?"
NEPCON China held in Shanghai April 23-25 was busy - but with tire kickers not buyers. The show, slightly smaller than the previous edition, seemed to lack the excitement of previous years as business outlook was cloudy. Noted by its absence was Assemblion. Several former Chinese companies appear to have also dropped out now that Reed was applying uniform prices to all exhibitors. Chinese firms paid reduced fees for spaces in prior years.
There was little in the way of innovation. There was a plethora of Western reporters from virtually all of the related media. There were at least 3 well known industry journalists from the U.S. and Europe conducting video interviews in English as well as Chinese of exhibitors and celebrity attendees.
Concern over the economic effect caused by the Chinese-Japanese territorial tiff over the Senkaku/Diaoyu islands increased during the show as stories of customs delays in critical spare parts and new equipment shipments were reported. Japan is a major suppliers of SMT assembly and test equipment to our industry in China.
Dr. Philip Carmichael, the new IPC President of its China operations (above), was there meeting people, making presentations, negotiating collaborative deals for the future, and giving interviews. The photo above was taken during his IConnect007's video interview in Chinese by Edy Yu for "RealTime with NEPCON China". The interview is available for viewing at 007's on-line RealTime site. During his short tenure Dr. Carmichael has met every major organization in our industry in China to see how he can increase the value proposition of IPC members. Making sense of 23 different trade shows and major events can be daunting, but Carmichael seemed unfazed by the challenge. He has already increased IPC's China membership by about 20% this year. He advised us to watch for new announcements in the near future.
The IPC sponsored hand soldering competition (above) remained a crowd pleaser in Shanghai as well as at its other previous venues.
CTEX 2013 which started as a show in Suzhou named "Circuitex" by Taiwan board makers will have its 9th presentation May 8-10 at the Suzhou International Exhibition Center. The name "Circuitex" was first coined by MacDermid in the early 1960's when it established its first specialty chemical line of products for the printed circuit industry. This year's presentation will cover bare boards, SMT and ICs with a focus on products for the iPhone5, IPad Mini, and Nexus 7 by Apple and Google. The event is being promoted as the 9th Suzhou PCB/SMT Show.
Comments from the CPCA event in Shanghai
"The first day of the show was moderate in attendance, the second was terrible, and the third day was worse. The weather was been wet and cold. But, I think that people are just not coming as they don't have enough business to justify the visit to the show."
"The PCB industry has matured. Most of the conventional processing equipment types have already been seen. It is difficult to draw the needed crowds to justify supplier expense in exhibiting, especially when the show is held simutaneously with another "electronics show" at a different venue, or within a week of other shows (Asia Solar PV Industry Exhibition, SEMICON China, International Trade Fair for Components & Assemblies, etc.) that draw from the same particular buying public. "
Our opinion: Horizons must be broadened to survive and thrive. Trade associations and exhibit producers will have to new create joint venues or find ways to partner in order to progress as HDI and print electronics move forward and advance along with flexible substrates in system packaging that brings semiconductor and board fabrication closer together.
Electronica & Productronica China 2013 held in Shanghai just a few days later appeared to draw the "Western" exhibitors that were absent from the CPCA event.
This column is intended to provide commentary on our industry and its events. It is based upon our own viewpoint on items that we believe to be of interest or importance. It is NOT intended to repeat what has already been reported, nor to echo all of the opinions already presented unless we feel the need for emphasis. In this case we believe that the Innovations Forum recently held in Germany, and organized by EPP Magazine and EMSNow and the IPC's ESTC (IPC Electronic System Technologies Conference and Exhibition) are the forerunners of a trend that will grow during the next decade. This movement will modify how we view our supply chains and relationships between innovater, maker, buyer and seller will change how we view and approach our activities in the various segments of our electronics manufacturing industries, e.g., medical, automotive, mobile computing, communications, industrial, and military.
A gathering of the clan
There was a "buzz session" at the IPC APEX show in San Diego in which most of the active members of the Raymond E. Pritchard Hall of Fame served as a panel to field questions from the audience. One of the questions asked was, "What must be done to bring PWB fabrication back to the United States?" A number of suggestions were offered by panel members. I believe that the question was ill framed. Why would anyone want to bring bare board building BACK to the U.S.? The word "BACK" says it all. We must go forward. We must further advance and integrate our technical and manufacturing capabilities and move forward to more of a systems approach to ensure a future. This includes new power generation (vis-a-vis the new nano solar antenna array developed at the University of Connecticut that is potentially 70% efficient versus the maximum conversion of about 20% for silicon), buried components, stacked and chip scale packages, thermal transmissions, optical circuit integration (yes that topic is "hot" again), and new/novel interconnect techniques - to mention a few opportunities. We cannot always totally dominate a "whole" technology. We must simultaneously focus on our own strengths while collaborating more with others to go forward.
I can provide specific examples based upon what I observed and learned at the San Diego event - if asked.
What do YOU think?
Another federal energy investment has gone South - no, make that West.
Lithium ion batteries have been in the news again following Boeing's highly publicized Dreamliner battery difficulties. China's Wanxiang Group has received clearance from the U.S.' Committee on Foreign Investment to acquire the assets of America's battery maker A123 for $257 million. The bankrupt A123, which makes batteries for electric cars and grid storage, was the recipient of $130 million of clean energy federal grants. The Wanxiang Group is an auto parts conglomerate.
Increased competitiveness and enormous changes (and opportunities?) through consolidation and acquisition
China's industry minister has put forth an aggressive goal of building five to eight giants in the electronics industry with $16+ billion in sales in the next two years through consolidation and overseas acquisitions and alliances. The Ministry of Information and Technology's blueprint wants to move the country away from low cost electronics manufacturing towards higher yielding, higher technical segments such as Lenovo and Huawei Technologies. We believe that China will reduce the mining of rare earth metals to increase margins and offset recent price declines while using these materials as leverage in foreign dealings. The country is still far behind the rest of the world in chip design and manufacture, so we can expect major moves in that arena. The China Development Bank will put $20 billion behind ZTE to help it reach the $16 billion goal. The Haier Group, one of China's bigger electronics companies, spent $700 million to buy a New Zealand company to increase access to Australia and Europe while increasing its technology base.
One has to wonder how the rest of the world will compete with this massive government supported approach. (China has a stated similar goal for automotive calling for 10 companies to have 90% of its industry concentration by 2015). One has to speculate who will join forces with China's electronic industry forays. How greatly does it threaten open markets and free competition elsewhere? How serious a role does industrial espionage play in this new game with newly stated ambitious goals? How big a role will defense issues and security have? Does America need a new vision for the future?
Looking for a new future
When will print electronics be ready for "prime time"? Or, have its initial forays into RFID chips and organic LED displays and lighting shown that this technology will forever be limited to niche (and possibly lucrative) markets? Venture funding for this industry has declined two years in a row to $626 million in 2012. It is our opinion that there will be a far greater and broader future in the electronics industry for graphene technology.
Graphene technology could speahead a new industrial revolution!
Graphene is a thin sheet of material composed of a single layer of carbon atoms.
A Nobel Prize was awarded for it just a few years ago (2010). It is the thinnest, strongest, most conductive material of both electricity and heat ever discovered. It is so dense that helium gas cannot pass through the single layer of atoms. It can be mixed with plastics to produce super strong conductive materials. It is transparent. Its applications range from semiconductors to ultra-capacitors, from touch screens to batteries, from solar cells to anodes. Samsung envisions a super thin flexible, touch sensitive smart phone made from this technology and already is the company with the most patents to its name. Graphene sheets will enable a new class of ultralight interconnect substrates ranging fom flexibles to HDIs.
At the close of 2012 China was the country with the most graphene patent publications (2,204). The U.S. had 1,754, South Korea had 1,160 and the UK, which started he research into this material in 2004, had only 54.
Is your company watching the progress with graphene? Are you aligned with any organization that is working in this arena? Are you planning to position your organization to take advantage of one or more of its opportunities during the next 3 to 5 years?
"The past is but a prelude to the future"
The following statement has been attributed to Cicero in 55 B.C. However, history Professor John Collins of Northern Illinois University stated that it actually originated in A Pillar of Iron (1965), Taylor Caldwell's fictionalized account of the life of the senator. As a result it is now neither substantiated nor disproven. It remains, though, an eternal object lesson and truism to us.
The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed, lest Rome become bankrupt. People must again learn to work instead of living on public assistance."
This is the time of year that all of our industry seers reflect upon the past and forecast the future. It is an all but impossible task this time. Economic woes, political game playing, power plays, personal attacks, and continued posturing and bickering of elected officials in "Foggy Bot-tom" (Washington, D.C.) all remain with us - without problem resolu-tion. They took an 11th hour step at year-end (2012) and beginning (2013) that defers major decisions, leaves the future of federal employees in doubt, eliminates the some tax increases for the"middle class" while increasing their payroll taxes. They defered facing the issue major cuts of sequestration for another two months while further dividing the country.
Meanwhile, there is talk of Japan's "new" (he was there once before) prime minister Shinzo Abe nationalizing the electronics industry in an attempt to save it.
At the same time, China’s manufacturing unexpectedly expanded in December at its fastest pace in 19 months, boosting optimism that a recovery in the world’s second-biggest economy is gaining traction.
As a result, I must admit that my crystal ball is not only broken, but it also appears to be cracked. However, there ARE some things evident to me!
We note that the prognosticators take a "long term" view and state that the production of printed circuit boards will reach $76.2 billion by 2015. The IDC's (International Data Corporation) Semiconductor Applications Forecaster states that semiconductor global growth for 2013 will be 4.9% to $319 billion following a 1% increase in 2012. It is expected to reach $368 billion in 2016.
We shall see the more talented EMS companies (those with strong engineering departments) add "box build" to their offered services.
We shall see a shift to a new form of hybrid regionalization in assembly manufacture as the labor cost differentials in the economically stronger regions.
We shall see new risk and cost analysis employed in the decison making process of deciding where to build a product and how much to build there. What will the major drivers be? Automotive electronics, tablets, "smart" phones, telematics, and new displays.
Fabricators will need to improve their capabilities in order to succeed in the future (in addition to cleaning up his act, stabilizing his work force, and training it better)? Most likely he will need a strong process engineering team and a very close communication link to designers to ensure that new boards or systems are designed for manufacture. Available processes and materials as well as cost options and the final package must all be considered.
Suppliers will have to provide materials with greater and finer dimensional tolerances and stability through a wider range of manufacturing cycles and environments.
ODM and OEM companies will have to re-evaluate the business strategy of partial or full regional manufacturing to provide product in within a particular geographic marketplace.
Assembly and fabrication equipment makers will have to consider new cost-cutting manufacturing strategies. E.g., noncompeting organizations could share overhead and direct costs by using a common custom "toll" manu-facturer for machine assembly.
All segments of the interconnect and electronic packaging industries supply chain will have to evaluate solving problems in providing products and technical support services to maturing or growing manufacturing areas as well as to local markets, e.g., Thailand and India.
Why-Oh-Why can't they get it right?
After 50 years in the business one would think that one would have seen some simple oft repeated problems resolved by the industry's fabricators. However, one of the most common explanations remains the fabricator's fabrications as to why an order is late or does not meet specifications. I asked several companies what were the 5 most recent problems encountered with the boards that they received during the last quarter of 2012. They were: Open circuits in innerlayers, misregistration, shorts in innerlayers, solder mask issues (scratches, peeling mask), and copper thickness under specification. These boards came from large "famous" suppliers, domestic suppliers, foreign suppliers, smaller "high quality" shops, established global companies, and local newer shops.
Really? In 2012?
Is the industry doomed to remain a "cottage industry" where scrap, remakes, and late deliveries will never cease to exist? Is this "way of life" solidly entrenched? Or, will it evolve to a higher level? Will the consumers of boards (OEMs and EMS companies) have to turn more to supply chain managers to guarantee that their purchases will arrive as ordered and on time? Hopefully, the new more aggressive global approach to standards and education being taken by the IPC will help advance the quality level of the world's fabricators.
What do you think? Let us know.
Feedback: Scratches are generally the result of poor training, careless handling or poor packaging. Peeling mask could probably have been prevented by the use of a resist bonding agent such as that provided by Duratech. Copper thickness issues could be due to solution maintenance, plating process and or equipment set up, or a random effect not picked up by statistical QC. Inner layer and misregistration problems could be caused by tooling (drilling, phototool, press) material selection and/or movement, press cycles and equipment. The designs coming in are pushing the technology too far, and too quickly. The biggest hits are minimum annular rings, with insufficient process and material considerations and allowances. Silicon manufacturers are reducing the component pitches at an alarming rate. The fabrication industry just can't seem to keep up. If fabricators would, in good faith, share well thought out technology roadmaps, then maybe they would have the time to stay ahead, or even keep pace with change. Assembly operations seem to be blind-sided at an inc5reasing pace, as well, and are having difficulty keeping up with rapid technology changes. They need certain performance characteristics, and therefore have to accept the tight packaging that comes with the turf. It used to be the military sector lagged the commercial sector by three to five years. Not any more!
There is a lot of speculation regarding Apple's stated intent to build a manufacturing site in the U.S. This is not a major move. Only 200 jobs will be created. I cannot help but wonder if this is related to *Foxconn's (Apple's major supply chain device manufacturer) recent offer to help train Americans in manufacturing technologies (see below). Is there a greater strategy about to be implemented? Is this the precursor to a potentially much larger move as costs continue to rise in China? America is still the major market for Apple where new products are introduced. Do Tim Cook and Terry Guo have a larger strategic plan? As Sherlock might say to Watson, "Methinks that a new game is afoot."
For Americans, too? More cooperative activities reducing redundancy is needed between the IPC and the EIPC.
The EIPC made following announcement on December 3: The EIPC has made an effort to provide the latest information on Standards for PCBs from Japan. The 4th edition was released at the JPCA Show beginning of June 2011. The EIPC is encouraging the specialists in the European Electronic Industry to learn the knowledge that has been cumulated by the Japan Electronics Packaging and Circuits Association (JPCA) and documented in the: Standard on Device Embedded Substrate Terminology Reliability Test/Design Guide -Edition 4.0- JPCA-EB01 (2011) The English version of the document is on stock at the EIPC office in Maastricht, The Netherlands.